All posts tagged fundraising

As New York firm Kohlberg Kravis Roberts & Co . prepares to formally close a $6 billion pan-Asian fund, its peer TPG Capital is still around a quarter of the way to securing a $4 billion vehicle that will also be invested across the region.

Both brand-name buyout houses have been out in the market, spending the bulk of last year tapping limited partners for new capital. In 2012 many private equity firms struggled to attract allocations from LPs, which grew increasingly concerned about firms’ ability to achieve returns and exit portfolio companies.

General partners that successfully closed new funds were largely those with solid track records and established management. They included China-focused FountainVest Partners, which closed a $1.35 billion second fund last year, and Singapore- and Hong Kong-based RRJ Capital, which has recently secured $3.5 billion for a second fund, although it fell short of a $5 billion target.

FountainVest Partners, a China-focused private-equity firm, has secured $1.35 billion for a second fund that will invest in mainland companies, it said Wednesday.

The new fund is 40% larger than Shanghai-based FountainVest’s previous one, its first, raised in 2008, and was partly backed by existing investors from its first fund.

FountainVest, which was set up by Frank Tang, a former Temasek executive based in Hong Kong, has closed the new fund as others are seeking new capital. U.S. buyout giant TPG Capital is currently raising a $4 billion pan-Asian fund.

Advent International announced Monday it had closed a $10.8 billion fund for global buyouts, the largest fund designed for buyouts to be launched since the financial crisis, according to data-provider Preqin.

The fund, dubbed Advent Global Private Equity VII, would be the second-biggest closing of any private-equity run fund launched since the crisis, Preqin said, losing out only to Blackstone’s 7th real-estate fund that raised $13.3 billion and closed last month.

As the Journal has reported, some funds have encountered a tough fund-raising environment, partly with a decline in performance in parts of the industry and partly because some investors feel adequately exposed to private equity. Wilbur Ross and Cerberus were among those raising smaller funds than they have before. Though firms with good returns, like Ares Management and Leonard Green & Partners both topped previous fund targets, WSJ wrote.

Many firms are expanding operations beyond traditional deals to take companies private by investing in other assets. The Blackstone real-estate fund, for instance, is buying foreclosed homes by the thousands.

David Mussafer, a managing partner at Advent, said investors in this fundraising were drawn to Advent’s pledge to remain strictly dedicated to private equity.

“They continue to be very supportive of the private equity category more broadly and see the value of the asset class,” Mussafer told Deal Journal. They like “this unique kind of singular focus on private-equity. It’s the only thing that we do.”

Fundraising in Asia is getting tougher, and investors are getting pickier.

According to data from the Asian Venture Capital Journal, private-equity funds raised in Asia Pacific in the third quarter of this year have almost halved from the same period last year, from $19.8 billion to $10.8 billion. The figure was down $2.5 billion from the previous quarter.

Limited partners, or investors in private-equity funds, voted with their feet on China’s economic slowdown, with funds raised in China dropping to just $3.3 billion in the third quarter, down 78.1% from $15 billion year-on-year. What’s more, according to AVCJ, dollar-denominated funds have come back in favor with investors over yuan funds, reversing a two-year trend, as interest in investing in China cools.

Private-equity fundraising and transactions decreased in almost every country in Asia during the first half of 2012, including China, as weak markets make IPO exits tough while continued high valuations put off investors, according to data from industry publication Asian Venture Capital Journal.

China continued to dominate fundraising, however, with local currency funds taking up a larger share of the total.

While the biggest funds like Kohlberg Kravis Roberts & Co. and TPG Capital continued to raise ever-bigger Asia-focused funds, fundraising in the region reached $26.2 billion in the first half of this year, a 23.4% drop from the same period a year ago and the lowest level since 2009. Less than 700 funds were closed in the period.

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Dealpolitik is Ronald Barusch's strategic look at deals currently making the headlines as well as the major forces at work in the deal-making world. He was a M&A lawyer with Skadden, Arps, Slate, Meagher & Flom for over 30 years. He retired in 2010 after 25 years as a partner at the firm. Click here for his current and archived columns.